As a crypto investor with a background in financial markets and experience following the actions of central banks, I find Arthur Hayes’ analysis intriguing. The potential weakening of the Japanese yen against the US dollar could indeed lead to increased demand for cryptocurrencies like Bitcoin (BTC).
As a crypto investor, I’ve been keeping an eye on the currency markets, and I believe that the weakening Japanese yen could have a significant impact on the price of Bitcoin and other cryptocurrencies. According to my analysis, this currency depreciation could potentially trigger actions that boost the value of digital assets like Bitcoin. Former BitMEX CEO Arthur Hayes shares this viewpoint.
The crux of his point lies in the rapid depreciation of the Japanese yen versus the US dollar, a result of significant disparities in their interest rates. This devaluation negatively impacts Japan’s export competitiveness compared to China.
If Japan fails to boost the value of its yen, China could respond by weakening the value of its yuan. This weakening would make Japanese exports more affordable in comparison to Chinese exports in global markets.
To prevent a yuan devaluation that could negatively impact US manufacturing, the US could persuade Japan to boost the value of its yen by arranging for the Federal Reserve and the Bank of Japan to enter into unlimited currency swap agreements. (Hayes outlined this approach in his most recent blog entry.)
Making use of substantial Fed dollar swaps would result in a larger global dollar supply, which in turn would make the dollar less strong, but grant China the ability to boost its economy sans yuan devaluation.
From an analytical perspective, a weaker U.S. dollar would lead to increased costs for investors holding dollars, thereby boosting the appeal and prices of assets priced in greenbacks such as U.S. stocks and Bitcoin.
As an analyst, I would interpret Hayes’ argument as follows: Instead of implementing more drastic measures such as the Bank of Japan increasing interest rates or the Federal Reserve implementing yield curve control directly, they opted for the “easy button” solution of currency swaps.
I observe the mounting pressure on the yen’s depreciation, which could reach its peak around the US election. This scenario might compel policymakers to intervene, leading to an increasingly bullish outlook for bitcoin as a safe-haven asset against growing global liquidity.
As a crypto investor, I’ve witnessed an incredible surge in the value of the primary cryptocurrency this year. The main catalyst for this growth has been the buzz surrounding potential Ethereum ETFs and the resulting demand. Yesterday, I was thrilled to see the price soar to a new high of $72,000, fueled by optimism that regulatory approval was imminent from the US Securities and Exchange Commission (SEC).
Many experts believe that the true surge in the rally won’t occur until major world powers, such as the United States, decrease their interest rates.
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2024-05-21 19:06